Oireachtas Library & Research Service | Bill Digest PMB Briefing Paper Control of Economic Activity (Occupied Territories) Bill 2018 (PMB) John Spicer and Abdul Malik of Europe Economics, Quentin Liger, Mirja Gutheil and Harry Heyburn of Optimity Advisors 28th February 2019 Abstract This Briefing Paper examines provisions contained in the Control of Economic Activity (Occupied Territories) Bill 2018 (PMB), in advance of Pre-Committee Stage Scrutiny (PCSS) of the Bill by the Select Committee on Foreign Affairs and Trade. This Bill proposes to make it an offence for a person to import or sell goods or services originating in an occupied territory or to extract resources from an occupied territory in certain circumstances; and to provide for related matters. Oireachtas Library & Research Service | Briefing Paper ContentsAbbreviation/Glossary ....................................................................................................... 1 Summary ........................................................................................................................................ 2 Introduction ..................................................................................................................................... 4 Key Issues/Areas for Discussion ..................................................................................................... 5 Introduction and the main provisions of the Bill ............................................................................... 7 Policy arguments in favour of and against this Bill......................................................................... 10 Government response to the Bill.............................................................................................. 12 Policy Implications of the Bill ......................................................................................................... 14 Sanctions as a policy instrument (and international comparators) ........................................... 14 Economic, Social and Environmental Impacts ......................................................................... 16 Legal ....................................................................................................................................... 24 Alternative Approaches ................................................................................................................. 27 Further Reading ............................................................................................................................ 28 Legal Disclaimer This Briefing Paper has been commissioned by the Oireachtas Library & Research Service to assist members in their consideration of the Control of Economic Activity (Occupied Territories) Bill 2018 [PMB]. The authors of the paper are: John Spicer and Abdul Malik of Europe Economics, and Mirja Gutheil, Quentin Liger and Harry Heyburn of Optimity Advisors. Any opinions expressed in the Briefing Paper are those of the authors. No liability is accepted to any person arising out of any reliance on the contents of this paper. Nothing herein constitutes professional advice of any kind. This document contains a general summary of developments and is not complete or definitive. It has been prepared for distribution to Members to aid them in their parliamentary duties. Some papers, such as Bill Digests are prepared at very short notice. They are produced in the time available between the publication of a Bill and its scheduling for second stage debate. Authors are available to discuss the contents of these papers with Members and their staff but not with members of the general public. © Houses of the Oireachtas 2019 Briefing Paper | Control of Economic Activity (Occupied Territories) Bill 2018 (PMB) 1 Abbreviation/Glossary EU European Union Green Line The de facto border of the State of Israel before the 1967 war (also referred to as the 1967 border or the 1949 Armistice border). It does not include East Jerusalem, the Golan Heights, the Gaza strip or the West Bank. Occupied territories The definition provided in the Bill considers the following as occupied territories: a territory which is occupied within the meaning of the Fourth Geneva Convention, and which has been confirmed as such in a decision or advisory opinion of the International Court of Justice, the International Criminal Court, an international tribunal, designated as such for the purposes of this Act in a regulation made by the Minister for Foreign Affairs and Trade TFEU Treaty on the Functioning of the European Union UN Security Council Concerning the issue of Israeli settlements in the "Arab territories Resolution 446 occupied by Israel since 1967, including Jerusalem” UN Security Council Concerning the Israeli settlements in "Palestinian territories Resolution 2334 occupied since 1967, including East Jerusalem" Oireachtas Library & Research Service | Briefing Paper 2 Summary The Control of Economic Activity (Occupied Territories) Bill 2018 was introduced by Senators Frances Black, Alice-Mary Higgins, Lynn Ruane, Colette Kelleher, John G. Dolan, Grace O’Sullivan and David Norris. The Bill was presented in the House on 24 January 2018 (Seanad first stage). The Bill underwent second stage debate in the Dáil on 5 December 2018. The overall aim of the Bill is to disincentivise illegal settlement expansion by ending economic support (through the trade of settlement goods) to states which are in breach of international humanitarian law with regard to their occupation of another state. The Bill’s geographical scope includes the Palestinian and Syrian territories occupied by the State of Israel; while other occupied territories are either clearly out of scope or unclear. The Bill is in line with UN Security Council Resolution 2334, which calls upon all states, to distinguish, in their relevant dealings, between the territory of the State of Israel and the territories occupied since 1967. The Bill is supported by Palestinian leaders, Amnesty International and the International Federation for Human Rights. The Bill has broad political support. The Government agrees with its intention and spirit despite opposing it. The Bill has been condemned by Israeli Government officials. The Government has chosen to oppose the Bill as it does not believe it is compatible with EU law and therefore will not achieve its aim of disincentivising illegal settlement expansion. The Government’s opposition to the Bill rests on three key issues Legal: the Bill could violate European Law, as issues of international trade fall under the common commercial policy of the EU. Political: The Bill could undermine Ireland’s diplomatic relations with both the United States (US) and Israel. Practical: The impact of the Bill may be broad, however, the Bill is expected to have very little direct financial impact and is therefore unnecessary. The Government believes the most effective course of action with regard to occupied territories is to work to find a solution at the EU level. The proposals under this Bill may have legal, environmental, economic and social implications. The direct economic impact of the Bill is unlikely to be important given the limited size of imports from settlement territories (estimated between € 1 million and € 1.5 million); It is likely that the State of Israel would impose retaliatory measures which would have a larger impact (Ireland imported € 77.4 million and exported € 268 million worth of goods from and to Israel in 2017). The largest potential negative impact of the Bill would be retaliation by the US. It is unclear whether this would materialise, but if they were to, the impact on the Irish economy would be important. There is uncertainty as to whether the Bill goes against EU rules on trade or could be covered by exemptions on the ground of public policy as per article 36 Treaty on the Functioning of the EU (TFEU). Case law clarifies some concepts but does not provide a clear answer. There is uncertainty as to the effectiveness of the Bill in achieving its policy objectives. It is generally accepted that sanctions and divestment played a role in the end of the Apartheid Briefing Paper | Control of Economic Activity (Occupied Territories) Bill 2018 (PMB) 3 regime in South Africa. However, as these sanctions were driven by the US, they had an important economic impact. At the international level, some measures targeting occupied territories have been introduced in Denmark and Chile, although their impact is uncertain. Furthermore, some local authorities have introduced boycotts of occupied territories but their impact is uncertain. Oireachtas Library & Research Service | Briefing Paper 4 Introduction This Briefing Paper is divided into seven sections as follows: Section 1: Key issues / areas for consideration; Section 2: Main provisions / principal elements of the Bill; Section 3: Policy arguments in favour of and against this Bill; Section 4: Policy implications (environmental, economic, social and legal); Section 5: Alternative approaches / initiatives; and Section 6: Further reading. The key issues identified in this Briefing Paper (Section 1) are intended to provide Members, and particularly the Members of the Select Committee on Foreign Affairs and Trade, with a range of possible issues, set in context. Briefing Paper | Control of Economic Activity (Occupied Territories) Bill 2018 (PMB) 5 Key Issues/Areas for Discussion This section sets out a list of possible issues that require clarification or further